CAA Benefits Alert: 2021 Appropriations Bill Adds New Restrictions on “Gag Clauses” for Health Plans 

Section 201 of the Consolidated Appropriations Act, 2021 (CAA) prohibits group health plans, health plan insurers, and issuers of health insurance coverage (together, Covered Parties) from entering into contracts that restrict a plan from accessing and sharing certain information. The goal of these new rules is to increase transparency in pricing and quality information for health care consumers and plan sponsors. Section 201 amends the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (the PHSA), and the Internal Revenue Code (the Code).

Specifically, the CAA prohibits Covered Parties from entering into contracts with health care providers, networks or associations of providers, third-party administrators, or other services providers offering access to a network of providers, if the contract would directly or indirectly restrict the Covered Party from doing any of the following:

• Providing provider-specific cost or quality-of-care information or data, through a consumer engagement tool or any other means, to referring providers, the plan sponsor, participants, beneficiaries, or individuals eligible to become participants or beneficiaries of the plan.
• Electronically accessing, upon request, de-identified claims information or data for each plan participant, or coverage information, consistent with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Genetic Information Nondiscrimination Act of 2008 (Gina), and the Americans with Disabilities Act (ADA) including, on a per-claim basis:
  • Financial information, such as the allowed amount, or any other claim-related financial obligations included in the provider contract;
  • Provider information, including name and clinical designation;
  • Service codes; and
  • Any other data element included in claim or encounter transactions.
• Sharing information or data described in the bullets above, or directing that such data be shared with a HIPAA business associate.

In addition, health insurance issuers offering individual health insurance coverage may not enter into any such agreement that would directly or indirectly restrict them from sharing data described in the first bullet above with a HIPAA business associate for plan design, plan administration, plan financial, legal, and/or quality-improvement activities.

Other Notes:

• Health care providers, networks, associations of providers, or other service providers can place reasonable restrictions on the public disclosure of this information.
• Group health plans and health insurance issuers will be required to submit an annual attestation that the plan or insurer is in compliance with these requirements.
• Section 201 does not contain an effective date and, thus, is effective on the date of enactment of the CAA (i.e., December 27, 2020).

Winston Takeaway: It is not atypical for an administrative services agreement or pharmacy benefit management agreement to contain provisions that restrict disclosure of certain proprietary information to plan sponsors or their business associates. These new transparency provisions should be incorporated into any new or future requests for proposals. In addition, health plan sponsors and fiduciaries should review their service provider contracts and HIPAA business associate agreements to ensure that they do not contain the prohibited provisions, and make any necessary amendments. Alternatively, plan sponsors may consider drafting a “snap-on” amendment to send to each service provider, specifying that the contract will comply with Section 201 and that any provision to the contrary is deemed deleted from the contract. These contracts may need to be further amended to comply with the Final Transparency in Coverage Rules discussed in our alert here. Employers will also need to ensure that any requested disclosures of claim information comply with the employer plan sponsor provisions of HIPAA.

This article is part of our “Unpacking the Employee Benefits Provisions in the Consolidated Appropriations Act, 2021” series. Click here for other CAA-related articles. Please contact a member of the Winston & Strawn Employee Benefits and Executive Compensation Practice Group or your Winston relationship attorney for further information.